One of the clearest examples of where direct government support can have a big impact at both individual and system levels is the Accelerating Commercialisation (AC) grant. The program provides matched funding of up to $1m for startups looking to commercialise new products. Grants are awarded as part of a competitive process, with applications assessed by a panel of industry experts. Successful applicants receive non-dilutive funding as well as access to a network of private sector business mentors and advisors. AC was set up in 2014, replacing a similar program named Commercialisation Australia, which had been providing matched grant funding since 2009.
In September 2019 AC program administrators released headline statistics about the effectiveness of the grant scheme since 2014. The results were very encouraging. In its five years of operation, the program has delivered more than 400 grants totalling more than $200m of support. Each year somewhere between 60 and 120 companies receive an average of around $400,000 in funding, matched against private sector investment (Figure 11).
The impact of these grants has been substantial. A survey of 266 grant recipients conducted by AC revealed that companies funded by the program over the last five years have, on average, gone on to raise another $3.75 for every dollar of grant funding awarded (not including the matched private sector funding required as part of the application process). These survey responses accounted for $148m of grant funding, or about 75% of all grants awarded since the program began.
This is a strong outcome in a short period of time. It’s worth keeping in mind that this data captures a range of grants issued up to five years ago, so many of the grants were much more recent than that. Lots of the companies in this data set are still relatively early stage. So the 3.75x multiplier is likely to continue to grow strongly in coming years.
Clearly this is good for capital availability, allowing promising companies to rapidly commercialise new ideas and providing non-dilutive funding at a time when this sort of support is most needed.
What may be less clear at first blush is the genuine advantage this program provides for Australian businesses looking to raise capital and remain in Australia. Perhaps the clearest example of this effect is that Canva, now one of Australia’s most successful digital businesses, raised its first round of capital with the help of $1.4m from AC’s predecessor program, Commercialisation Australia (CA).
Canva’s CEO Melanie Perkins has publicly credited the CA grant as a big reason why Canva was able to stay in Australia: ‘When we were getting pushback about being located in Australia, we added the slide in our Appendix about the Commercialisation Australia grant opportunity that would essentially double [investors’] funding.’ In fact, in her foreword for the 2018 edition of Crossroads, Melanie said that without the grant ‘Canva certainly wouldn’t be where it is today’. At the time, it had just surpassed a US$1 billion valuation.
Despite a healthy environment for venture capital in Australia, the data suggest that the availability of early stage funding has fallen significantly in recent years (see p19). That makes successful programs like AC even more important. The number and quality of companies looking to raise funds to commercialise new ideas has also grown substantially since 2014. Boosting funding to AC, expanding its visibility with founders, and broadening the scope of the program to include new technology areas would likely deliver strong results in this environment.
A full list of AC grants from 2015-2019 is available at www.business.gov.au/Assistance/EntrepreneursProgramme/Accelerating-Commercialisation/Accelerating-Commercialisation-funding-offers